The new California paid sick leave law is now "in effect" (as we reported here and here) and you are ramping up your HR and payroll team to get ready for July 1 when employees can start accruing sick leave under the law. But now that you're digging into the details, you're realizing that this isn't as easy as you thought. Don't worry, you're not alone. There are a few subtleties to the sick leave law that are catching more than a few employers off guard. But fear not, here are some tips to help you implement your sick leave plan:
Even if you plan to comply with the new sick leave law through an existing Paid Time Off (PTO) or Flexible Time Off (FTO) policy, it is a good idea to track sick leave separately. Here's why:
Sick leave is protected, which means employees cannot be terminated or retaliated against for using or requesting the use of paid sick leave. In other words, you can't tell employees that they can't take it, you can't require them to get a replacement on the days they are out, and you can't penalize them for taking sick days, such as by giving them absence "points" pursuant to a company attendance policy. Tracking it separately mitigates the risk of inadvertently taking adverse action. It also could later be used as "proof" that the company is complying with the law.
The rate that must be paid for sick leave days is very specific and may differ from the company's method of payment for PTO days. For an employee who, in the 90 days before taking a protected paid sick leave day, had different hourly pay rates, was paid commission or by piece rate, or was a nonexempt salaried employee, the rate of pay is calculated by dividing the employee's total wages, not including overtime premium pay, by the employee's total hours worked in the full pay periods of the prior 90 days of employment. Yes, that means that, for employees with varying rates of pay, the amount paid for each sick leave day could be different every single time. Tracking sick leave separately will make it easier to make sure the right rate of pay is applied.
Tracking is even more important if you have a program that puts no cap on the amount of paid time off that can be taken–also known as a "Flexible Time Off" or "FTO" plan. The DLSE has specifically called out this type of plan in their FAQs and noted that although "Most employers with this new but growing policy do not track how much time employees take off or for what reason," they must now "separately track sick leave accrual and use." This includes reporting the amount of sick leave available to employees on their paystubs.
Create a clear procedure on how employees can designate a day off as protected sick leave. Under the law, it is okay to put the onus on the employee to provide notice that he/she wants the day off to be designated as "sick leave," so long as the notice can be provided orally or in writing. And, if you follow our advice above to track sick leave, this is the best way to ensure you know the difference between a regular day off and a protected sick leave day. To that end, it is important to tell your employees that if they want to designate time off as sick leave: (1) they will be responsible for providing reasonable advance notice to a designated person (e.g. a direct supervisor or HR) if the need for sick leave is foreseeable; (2) if the need for paid sick leave is unforeseeable, they must provide notice of the need for the leave as soon as practicable; and (3) if they do not follow the procedure for providing notice, their day off may not be treated as protected sick leave.
Don't forget to provide sick leave to ALL employees. Most employers' PTO policies apply only to employees who work more than 20 hours a week. If you are relying on a PTO policy to comply with the sick leave law, and that policy doesn't apply to all employees, you may have a gap. In that case, you could either expand your PTO policy or create a separate sick leave policy that provides at least the minimum sick leave required for part-time employees.
Don't forget about San Francisco's sick leave ordinance. If you have employees working in San Francisco, they are entitled to accrue one hour of sick leave for every 30 hours worked, subject to a 72 hour cap. This is more generous that the California law. Unfortunately, unlike the California law, San Francisco's ordinance does not allow employers to provide 3 days (or 24 hours) up front at the beginning of the year to comply. Nor would an up-front allotment of 72 hours necessarily suffice. San Francisco's 72-hour cap is an accrual cap, not an annual use cap. And, San Francisco requires employers to allow annual carry-over of unused sick leave (the California law does not). All of this means that employees could have the opportunity to use more than 72 hours of paid sick leave in a year. San Francisco's FAQs give the following example:
David accrues 72 hours of paid sick leave in year 1. In January of year 2, he falls ill and uses all of those hours at that time. David comes back to work and over the next nine months accrues 48 hours of paid sick leave. Then, in November, he falls ill again and uses those 48 hours of paid sick leave. In total, under this scenario, David has used 120 hours of paid sick leave in year 2. Under this scenario, a policy that only permits employees to use 72 hours of paid sick leave per year would be insufficient to meet the requirements of the law.
What about San Diego, you ask? Didn't their ordinance take effect in January? Here's the good news (you were waiting for some, weren't you?): It turns out that on September 16, opponents to the ordinance filed over 56,000 petition signatures to repeal it. As a result, on October 20, the San Diego City Council voted to put it to popular vote during the next San Diego election in June 2016. So, for now, only the CA sick leave law applies to workers in San Diego.
We always like to end on a good note. But these are just a handful of the subtleties. Before implementing your sick leave plan, be sure to reach out to your legal counsel for advice.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.